Management Sample Coursework

Question

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Trader Joe’s Assignment (10 Points)

This assignment must be done individually. You have to address the question listed below after reading the case on Trader Joe’s attached on the next page. The length of the assignment should be 1 full page, typed single-space using 12 point Times New Roman font.If you refer to any source besides the case, provide a list of references.

For more information on Trader Joes, visit the organization’s home page at www.traderjoes.com. Additionally, you can also research blogs and current news reports about the company.

ASSIGNMENT QUESTION

  • Examine Trader Joe’s obligation to its multiple stakeholder (employees, customers, and community). In what ways does Trader Joe’s demonstrate the importance of meeting the expectations of its multiple stakeholders?

Case: Trader Joe’s

While vacationing in the Caribbean, founder “Trader” Joe Coulombe discovered a way to differentiate his 7-Eleven–style corner stores from those of his competitors. Joe observed that consumers are more likely to try new things while on vacation. With a nautical theme and cheerful guides sporting Hawaiian shirts, Joe transformed his stores into oases of value by replacing humdrum sundries with exotic, one-of-a-kind foods priced persuasively below any reasonable competitor.

For over fifty years, Trader Joe’s has competed with such giants as Whole Foods and Dean& DeLuca. So what is its recipe for success? The company applies its pursuit of value to every facet of its operations. Buyers travel all over the world in search of great tasting foods and beverages. By focusing on natural ingredients, inspiring flavors, and buying direct from the producer whenever possible, Trader Joe’s is able to keep costs down. The chain prides itself on its thriftiness and cost-saving measures, proclaiming, “We run a pretty lean ship,” “Every penny we save is a penny you save,” and “Our CEO doesn’t even have a secretary.”

“When you look at food retailers,” says Richard George, professor of food marketing at St. Joseph’s University, “there is the low end, the big middle, and then there is the cool edge—that’s Trader Joe’s.” But how does Trader Joe’s compare with other stores with an edge, such as Whole Foods? Both obtain products locally and from all over the world. Each values employees and strives to offer the highest quality. However, there’s no mistaking that Trader Joe’s is cozy and intimate, whereas Whole Foods’ spacious stores offer an abundance of choices. By limiting its stock and selling quality products at low prices, Trader Joe’s sells twice as much per square foot than other supermarkets. Most retail mega-markets, such as Whole Foods, carry between 25,000 and 45,000 products; Trader Joe’s stores only carry around 4,000. But this scarcity benefits both Trader Joe’s and its customers. According to Swarthmore professor Barry Schwartz, author of The Paradox of Choice:  Why Less Is More, “Giving people too much choice can result in paralysis. . . . [R]esearch shows that the more options you offer, the less likely people are to choose any.”

Despite the lighthearted tone suggested by marketing materials  and in-store ads, Trader Joe’s aggressively courts friendly, customer-oriented employees by writing job descriptions highlighting desired  soft skills (“ambitious and adventurous, enjoy smiling and have a strong sense of values”) as much as actual retail experience.

Trader Joe’s connects with its customers because of the culture of product knowledge and customer involvement that its management cultivates among store employees. Trader Joe’s considers its responsible, knowledgeable, and friendly “crew” to be critical to its success. Therefore they nurture their employees with a promote-from-within philosophy.

Each employee is encouraged to taste and learn about the products and to engage customers to share what they’ve experienced.  Most shoppers recall instances when helpful crew members took the time to locate or recommend particular items. Says one employee, “Our customers don’t just come here to buy a loaf of bread. They can do that anywhere. They come to try new things. They come to see a friendly face. They come because they know our names and we know theirs. But most of all, they come because we can tell them why not all Alaskan salmon has to come from Alaska or the difference between a Shiraz and a Syrah. The flow of ideas and information at the store level is always invigorating.”

When it comes to showing its appreciation for its employees, Trader Joe’s puts its money where its mouth is. Those who work for Trader Joe’s earn considerably more than their counterparts at other chain grocers. Starting benefits include medical, dental, and vision insurance, company-paid retirement, paid vacation, and a 10% employee discount. Being a privately owned company and a little media shy, Trader Joe’s has been keeping some of its financial information confidential these days, but outside estimates suggest that managers make at least $120K per year.

Outlet managers are highly compensated, substantially more than at other retailers, partly because they know the Trader Joe’s system inside and out (managers are hired only from within the company). Future leaders enroll in training programs such as Trader Joe’s University that foster in them the loyalty necessary to run stores according to both company and customer expectations, teaching managers to imbue their part-timers with the customer-focused attitude shoppers have come to expect.

So it came as a horrifying surprise to many of those shoppers that Trader Joe’s had a new nickname: “Traitor Joe’s.” The usually environmentally friendly company fared the worst of the national chains on Greenpeace’s recently released seafood sustainability scorecard. Greenpeace’s study, Carting Away the Oceans: How Grocery Stores are Emptying the Seas, ranked 20 supermarket companies by assessing their seafood policies and checked to see whether they sold red-listed seafood—those that are overfished and need to be conserved to ensure their survival.12 Greenpeace surveys found Trader Joe’s selling 15 of the 22 red-list seafoods.12 In response to strong feedback from its customers—and, no doubt, to a Greenpeace-built lookalike Traitor Joe’s Web site—Trader Joe’s was quick to respond. The company promised to only offer sustainable seafood by the end of 2012, remove red-listed seafood from its shelves, and improve its product labeling to provide consumers with more accurate information about seafood products.

Will Trader Joe’s keep its promises to consumers, and will it pass the cost of doing so on to them? As buyers are increasingly mindful of how and where each dollar is spent, Trader Joe’s may have some tough choices ahead.

Answer

Trader Joe’s Assignment

            Every business has an obligation to fulfill its stakeholders. In this case, Trader Joe’s has an obligation towards his employees, customers, and the community. To begin with, Trader Joe’s has an obligation to make employees feel valued by giving them autonomy and offering them a good compensation package for their contribution. On the other hand, it is the business’s duty to ensure that customers get value for their money. It has an obligation of making the customers feel comfortable at the store and providing quality products at a reduced cost. Similarly, Trader Joe’s has an obligation of contributing to community wellbeing, for example, by playing a role in environmental conservation.

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            Trader Joe’scase demonstrates the importance of meeting the obligations of the employees by giving them the freedom to make independent decisions in their interactions with customers. The employees’ input is valued in the store hence making the relationship among the workers, owner of the business, and customers positive. Besides, the employees are offered a good compensation package that is higher than that of other employees working in the same field. The benefits offered to employees include medical, dental, and vision insurance. They are also offered paid vacation, retirement benefits, as well ten percent discount when they buy products at the store. The employees are also offered a training opportunity to improve their skills and knowledge.

            Customers get the value for their money at Trader Joe’s’s by being offered food products of high quality at a cheaper price than other stores. Trade Joe’s has employed employees who aggressively court the customers to create loyalty. The employees also have sufficient product knowledge, meaning they are able to help customer’s make positive choices. They are also able to engage the customers and use their experience to promote the business. Trader Joe’s also buys most of his products locally and directly from the producers hence passing the saved cost to customers through discounted prices.

            By procuring most of his products locally, Trader Joe’s is also showing obligation to the community. Besides, the store operatorsgenuinely care for the conservation of the environment. When the store was once ranked among the worst performers in terms of conservation of environment by Greenpeace study, Joe Coulombe, its founder, promised to offer sustainable seafood by removing red-listed products from his shelf and improving product labelling. Trader Joe’s, therefore, values all its stakeholders, and this is evident in the way the store engages in business practices that promote their best interests.

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